Building a Better Healthcare Board

Progressive boards are making the effort to ensure there is a rotation of terms and an opportunity for members to become educated about healthcare. That means maintaining their position for enough time to make a difference. Increasingly, best practice recommends three three-year terms as a commitment.

"It takes one to two years to understand what's going on," says Williams.

Once a committed, well-rounded board is in place, the committee structure is much more robust than ever before, particularly in the quality committee, he says.

"Ten years ago, how many boards had an active quality committee? Very few," he says. "Now, boards not only have one, but it's the most active of the committee structures," Williams says.

The quality function traditionally had been relegated to the chief medical officer and physician representatives on the board. Now, quality committees have multidisciplinary clinical representation and are actively looking at criteria-based results, especially when it comes to public data. And audit and compliance committees are more active than ever before.

Historically, one of the first reports in the board meeting was from the finance committee, Williams says. Now, quality and compliance are at the top of the agenda.

In the past, competent board members who looked at themselves as business leaders delegated clinical matters to the physicians. "But now they really have to understand clinical outcomes, how they're being graded, and how it affects reimbursement," Williams says.

When their education about the forces acting upon their organization in today's healthcare marketplace is sufficient, Williams says board members can be a big help in working in the public arena on advocacy and the education of legislators.

"Once they really understand what's happening in healthcare due to the ACA and other business imperatives, they can call legislators and explain how their decisions will affect the hospital with which they serve on the board," he says. "A lot of these people are highly influential anyway, and if they can speak with understanding to the issues, that makes a lot of difference to the elected official."

The most obvious change in boards Williams has dealt with is the sense of accountability they now place on the CEO. Historically, the board may have been led by the CEO and the directors simply affirmed his or her decision-making. Now boards are much more engaged in setting strategic vision for the organization and holding management accountable for achieving that through operations, he says.

"But they're saying, 'Don't just do it, show us how you're achieving that vision,' " he says. "There are some CEOs who are not as excited about having board members in their business as they should be, but thank goodness it's happening."

In an anecdotal example, CHC and Williams were called in to assist a hospital in an urban marketplace that he prefers not to name for obvious reasons. "They have a history of success. You would know them," he says.

On the day Williams arrived to meet the board and attend his first meeting, the board chairman opened the meeting by reminding his colleagues to get their continuing education trips scheduled, and that hospital administration would make arrangements for them. He suggested many East and West Coast opportunities for board education at tony resorts.

"The irony of that is that he was encouraging them to spend money when they had three days cash on hand. Their heads were stuck in the sand, and that's because the CEO had not kept them informed about the hospital's need to change. They were on the brink of failure and they didn't know it."

Williams and CHC eventually led a multimillion-dollar turnaround there, he says, "through basic blocking and tackling."

But they were lucky. If a hospital is too far gone financially or has not retooled to better respond to the fact that it is being judged on other factors, board members may be in for a rude awakening, he says.

"There will be hospitals that will close. Many board members have never thought about living in a community where there was not a hospital, but for first time, they're being challenged by demographic and economic factors they have never faced before," he says. "I love to tell boards that the more control you desire to keep, the less access to capital you'll have."

Many times that is reflective of how an organization has been managed in the past, and there's only so much that can be done to change the pecking order now that so much time has passed and so many healthcare organizations are so far ahead of them.